Welfare reform as the politics of redistribution - Part Two

The second of a three part series by Donna Wynd on welfare reform as the politics of redistribution.

Part 1: Changes to New Zealand’s social assistance and child poverty

The politics of welfare reform

In 2009 the government set up the Welfare Working Group. The group’s recommendations largely centred on getting beneficiaries back into work, making them comply with certain behaviours the Group deemed desirable. In effect, the Group’s message to those on benefits was ‘we know what’s best for you’ not ‘how can we help you?’ This top-down approach to determining what is best for beneficiaries has been a consistent theme of the government’s welfare reforms.

National has always disliked social assistance, and signalled very clearly early in its first term that it would cut social spending. It is a policy that aims to shift income from the poorest to the better off. This is what they did in 1991 and the results are evident in the graph above. The global financial crisis provided a fig leaf for cutting social services as the government jumped on the austerity and balanced budget bandwagon.

The fact is that economics tells us that in a recession, governments should increase spending not cut it but that hasn’t stopped governments around the world choosing to ignore basic economic theory. And in every country, the groups that have suffered have been those least able to defend themselves, including children in low-income households.

Changes to social welfare were introduced over three long and complex pieces of legislation with the last coming into effect in July 2013. The legislation was backed up by almost no research, and there is no evidence that any of the changes are lifting people out of poverty. Child Poverty Action Group is also concerned that there was almost no mention of disability during the drafting of the legislation, and it is very difficult for parents of disabled children to get work test exemptions. The same applies for people on what used to be the Sickness Benefit for mental health problems.

What broader conclusion can we draw from these changes? The first is that welfare is about the politics of redistribution. If we want to deal with poverty and income inequality, the way to deal with them is through redistribution of national income, not just making the national income pie larger. Welfare reform in New Zealand and elsewhere is about taking money from the poorest so governments can, in essence, afford tax cuts for the better off. How do governments get away with this year after year, decade after decade? Because the target group is often socially isolated, disparate, and too busy to organise an effective opposition.

There’s the elephant in the room when it comes to welfare reform, and that is discrimination: Maori and Pacific women are disproportionately affected by poverty. Under this National government the World Economic Forum has noted that women have gone backwards in terms of economic participation and opportunity, and this is undoubtedly impacting on those with the fewest resources. It’s easy for people to dismiss the experiences of these women because most of us never see them except if we work late and they come in to clean our offices. But in New Zealand poverty, and child poverty, is an ethnic issue and one I believe will have profound implications for our future.